Counseling
To know whether a reverse mortgage is right for you or your family, the U.S.
Dept of Housing and Urban Development (HUD) and other agencies have prepared
materials for homeowners looking for reverse mortgage counseling.
- Reverse Mortgage Counseling Checklist –
California (pdf) - National Council on Aging: Reverse Mortgage
Booklet (pdf) - Preparing for Your Counseling Session
(pdf)
With all FHA-insured Home Equity Conversion Mortgages (HECM), the homeowner
is first required to attend an counseling session with a licensed Reverse
Mortgage counselor. In this session, which can take more than an hour and a
half, information and advice is given to the homeowner based on his/her budget
and individual reasons for wanting a reverse mortgage. The counselor and
homeowner(s) review income, any debts or existing mortgages, monthly expenses
including medical, home improvement plans, cash flow, and other relevant
factors. This session can be held over the phone or in person.
You can also expect to learn about:
◦ The FHA and how the HECM program works
◦
Interest rates and your loan options
◦
The Total Annual Loan Cost Disclosure you receive from your
HECM lender
◦ How a reverse mortgage (and what type of
loan) may fit into your budget
◦ Closing costs and
associated fees, and how they may be financed
For family members acting as power of attorney or legal guardian for the
homeowner, the reverse mortgage counselor will require proof of guardianship or
power of attorney before arranging the session.
If one spouse is not on title to the property, the spouse must also join the
counseling session. This non-borrowing spouse should understand that if the
borrowing spouse predeceases or no longer uses the home as their primary
residence, the reverse mortgage will become due. In these cases, repayment is
typically made through the proceeds of the sale of the property, or through a
refinance into a new mortgage.
It is a good idea for the family to sit down together and discuss their wants
and needs for a reverse mortgage prior to this session, and for a family member
or members to join the counseling session.
After the session, the homeowner will receive the required “Certificate of
HECM Counseling”, which verifies that the prospective borrower has met with a
licensed counselor.
With this certificate in hand, prospective borrowers are then directed to
submit a reverse mortgage application.
To find an FHA-approved reverse mortgage counseling agency, visit the HECM National Counseling Network page
by U.S. HUD, or search the database by location here.
For more information on the Application process, visit the Application
page.